Maharashtra Budget 2025: Auto and Capital Goods Stocks Slide, Pharma Leads Market Gains

The Maharashtra Budget 2025-26, presented by Deputy Chief Minister Ajit Pawar on March 10, introduced several tax revisions that have significantly impacted the stock market, particularly the automobile and capital goods sectors. These changes aim to increase state revenue but have triggered volatility in related stocks.

Key Budget Proposals

• 6% Tax on Premium Electric Vehicles (EVs):

• A motor vehicle tax of 6% was proposed for EVs priced above ₹30 lakh. This is expected to generate ₹170 crore in revenue, but could dampen demand for high-end EVs.
• Companies like Tata Motors and Mahindra & Mahindra are likely to see reduced sales in this segment.

• 1% Hike in CNG/LPG Vehicle Tax:

• Privately owned CNG and LPG four-wheelers will now face a 1% increase in motor vehicle tax, projected to bring ₹150 crore in additional revenue.
• Mahanagar Gas Limited (MGL), which supplies CNG, is directly affected by this revision.

• 7% Tax on Construction Vehicles and Light Goods Vehicles (LGVs):

• Vehicles used for construction activities, such as cranes and excavators, along with LGVs carrying goods up to 7,500 kg, will be taxed at 7%, generating an estimated ₹625 crore annually.

Stock Market Impact

The budget proposals caused sharp declines in stocks tied to the affected industries:

• IndusInd Bank: Shares plummeted by 23.01%, hitting a 52-week low at ₹693.30. The bank’s exposure to auto loans may have contributed to investor concerns.
• Mahindra & Mahindra (M&M): Dropped by 1.80%, reflecting concerns over increased costs for CNG-powered mini trucks and luxury EVs.
• Ashok Leyland: Fell nearly 3%, extending its six-month loss due to its focus on LGVs and construction vehicles.
• Mahanagar Gas Limited (MGL): Declined by 1.47%, as higher taxes on CNG vehicles raised concerns about demand.

Sectoral Performance

• Automobile Sector:

• The BSE Auto Index fell by 1.2%, reflecting investor apprehension about increased operational costs and reduced consumer demand due to higher taxes.

• Capital Goods Sector:

• The BSE Capital Goods Index dropped over 2%, as taxation on construction vehicles dampened sentiment among investors.

Sensex and Nifty Updates

As of March 11, 2025:

• The Sensex closed flat at 74,044, showing a marginal dip of 0.10%.
• The Nifty ended at 22,457, down slightly by 0.02%.

Despite losses in auto and capital goods stocks, gains in sectors like pharma helped offset broader declines:

• Top Gainers: Sun Pharma (+2.87%), ICICI Bank (+1.92%), BPCL (+2.13%), Trent (+1.94%).
• Top Losers: IndusInd Bank (-23.01%), Infosys (-2.94%), Bajaj Finserv (-2.06%), M&M (-1.80%).

Broader Implications

While these tax hikes are aimed at fiscal consolidation, they have raised concerns about higher operational costs for businesses and reduced affordability for consumers in key sectors. Analysts predict short-term volatility in affected stocks but expect stability as companies adapt to the new tax regime starting April 1, 2025.

The Maharashtra government’s focus on increasing revenue through targeted taxation policies has created ripples across the stock market, highlighting the interconnectedness between fiscal measures and market performance.

Disclaimer: This news is solely for educational purposes. The securities/investments quoted here are not recommendatory.

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